905ST - Today's Topic Financial Accounting Information for...

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Today’s Topic PLEASE TURN OFF CELL PHONES Financial Accounting Information for investor decision-making in accountability situations This class will: Describe the communication (= financial statements)  provided to decision-makers (= investors)                    by  financial accounting
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Fig 55. Overview of Financial Accounting Information and Decision Making CONTEXT PROCESS Investor, Financial Analyst DATA INFORMATION DECISION SYSTEM T R A N S A C T I O N S Accounting System Financial Statements Income, Value Investment Decision Invest or not GAAP Market Price
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Fig. 56 FASB (GAAP) Requirements Financial Statements: Balance Sheet Income Statement Statement of Cash Flows Statement of Changes in Stockholders’ Equity Each contains: : Broad categories of accounts : Smallest classification of activity
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Fig. 57 Basic Elements of Financial Statements Balance Sheet - Liabilities Income Statement Revenue - Expense Statement of Cash Flows Net Cash Flows from: Operating Activities Investing Activities Financing Activities + Beginning Cash Balance Statement of Changes in Equity Beginning Equity Balance + - Dividends
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Fig. 58 Balance Sheet Elements are resources business uses or will use to produce revenue Cash Amount owed to the business by others Property owned by the business are claims by creditors on assets Amounts owed by the business to others is claims by investors (owners) on assets Amounts contributed by owners to the business Amounts earned by business but not yet given to owners
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Fig. 59 Accounting Equation: Balance Sheet Claims on the assets are from two sources:   1. Creditors (                    )  2. Investors or owners (                ).
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Fig. 60 Accounting Equation: Balance Sheet Assets = Liab. + Equity 500 $ = 200 $ + 300 $
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Fig. 61 Accounting Equation: Balance Sheet Accounts are                                 +                   Or, for a corporation:
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Another Element of Balance Sheet: Current Assets                              are expected to be converted to cash or  consumed within one year or an operating cycle, whichever is  longer. Current assets include the following accounts: Cash Cash Marketable Securities Marketable Securities Accounts Receivable Accounts Receivable Short-Term Notes Receivable Short-Term Notes Receivable
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This note was uploaded on 03/18/2008 for the course ACIS 2116 taught by Professor Cmeasterwood during the Fall '08 term at Virginia Tech.

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905ST - Today's Topic Financial Accounting Information for...

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